Tuesday, June 22, 2010

Reliance Cap Buys 18% In Bloomberg-UTV

Anil Ambani-owned Reliance Capital Ltd (RCL) has acquired 18% stake in Bloomberg-UTV business news channel for an undisclosed amount. Shares of Reliance Capital went up Rs 4.10 or 0.54% to trade at Rs 761.65 on the Bombay Stock Exchange today.

Bloomberg UTV is a strategic partnership between Bloomberg LP, a global leader in business information, and the founder of UTV, Ronnie Screwvala. Post restructuring, Bloomberg will own 15% of Bloomberg UTV and the balance 67% is controlled by the UTV founders.

UTVi was rebranded as Bloomberg UTV after Bloomberg picked up a 15% stake in October 2009. It signed a content and co-branding agreement with Bloomberg after the deal. UTVi was broadcast by UTV News Ltd, a company wholly owned by Ronnie Screwvala, also chairman and promoter of UTV Software Communications Ltd.

The investment will form part of Reliance Capital's exposure to the media sector including its existing investments in the Network 18 group (which operates CNBC-TV18, CNN-IBN, IBN 7, Colors and Awaaz channels), and TV Today network (which operates the Aaj Tak and Headlines Today news channels).

According to a report jointly published by the Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG, the media and entertainment industry in India is likely to grow 12.5% per annum over the next five years and touch $ 20.09 billion by 2013.

Anand Shah, media analyst with Angel Broking, is of the view that more consoildation is bound to happen in the Indian media industry in near future. "Currently, there are lots of loss-making media groups in the country, for whom the survival will be difficult. However, in electronic media, only those with more channels and strong networks can survive in the present condition. As of now, there is lesser room for too many media players."

Once the FDI cap is removed, the consolidation will not happen as much because more money will be pumped into the industry, he added. According to VCCEdge, since 2005, 38 M&A deals worth $730 million were struck in the broadcasting space. In media, 156 M&A deals worth $1.6 billion took place since 2003.

The major deals in broadcasting space in 2010 include Zee Entertainment Enterprises' acquisition of 9X channel from INX Media Pvt. Ltd. for a price of approximately $14.4 million (Rs 640 million). In another deal, Zee Entertainment Enterprises acquired 50% stake in Dubai-based Taj Television Ltd. for a price of $44.14 million (Rs 2 billion) from Bukhatir Investments Ltd. The company had acquired 50% stake in Taj Television for $57.15 million in late 2006. Taj Television Ltd. owns and operates Ten Sports channel.

In 2009, Turner Asia Pacific Ventures Inc., a wholly owned subsidiary of Time Warner Inc. acquired 85.68% stake in NDTV Imagine Ltd. for a price of $126.5 million (INR 5.91 billion) from NDTV Networks plc. NDTV Imagine Ltd. is a Hindi general entertainment channel established by NDTV Group.

Two months back, NDTV had terminated its agreement with Scripps Networks Interactive Inc. for the sale of a 69% stake in its subsidiary NDTV Lifestyle (which operates NDTV Goodtimes) for $55 million. The transaction was expected to be completed by the end of the first quarter of 2010.